Chapter 3 Flashcards

1
Q

Total assets=

A

Total liabilites + Total stockholders equity

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2
Q

a financial statement that shows a firm’s financial position (assets, liabilities, and equity) at a point in time

A

Balance sheet

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3
Q

Total stockholder equity=

A

Total assets- total liabilities

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4
Q

Net working capital=

A

total current assets- total current liabilities

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5
Q

net plant and equipment=

A

total plant and equipment- accumulated depreciation

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6
Q

represents stock that the firm has repurchased from investors.

A

Treasury stock

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7
Q

The generally accepted accounting principles (GAAP) are set by the

A

The Financial Accounting Standards Board (FASB).

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8
Q

The depreciation method used by a firm does not affect the cost of the asset. True/False

A

True

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9
Q

Accounting statements are

A

based on historical data

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10
Q

Earnings per share are measured by dividing earnings-before-interest-and-taxes (EBIT) by the number of shares outstanding. True/False

A

False

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11
Q

Buying and selling long-term assets are considered _____ activities in the statement of cash flows of a firm.

A

Investing

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12
Q

Accounting profits do not consider noncash expenses. True/False

A

False

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13
Q

Interest is a tax-deductible expense. This causes firms to have a preference for

A

financing with bonds.

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